Morningstar DBRS Finalizes Provisional Credit Ratings to NYC Mortgage Trust 2025-3BP

DBRS, Inc. (Morningstar DBRS) finalized its provisional credit ratings to the following classes of Commercial Mortgage Pass-Through Certificates, Series 2025-3BP (the Certificates) to be issued by NYC Mortgage Trust 2025-3BP (the Trust) as follows:

-- Class A at AAA (sf)
-- Class B at AA (low) (sf)
-- Class C at A (low) (sf)

All trends are Stable.

The NYC Commercial Mortgage Trust 2025-3BP single-asset/single-borrower transaction is collateralized by the borrower's fee-simple interest in 3 Bryant Park, a 42-story, 1.2 million-square-foot (sf) office tower and retail property. Located in Midtown Manhattan, in between 41st Street and 42nd Street on 6th Avenue, the collateral features unencumbered east-facing views of Bryant Park. The office tower was constructed in 1972 as a telephone switching facility, and it was converted to a traditional office in 2009 for a total cost of approximately $305 million. The collateral also includes a retail annex, which features a glass cube space at the property's base on West 42nd Street, and a three-story, glass-walled steel structure that was completed in 2014 for a total cost of $210 million. These structures frame an approximately 16,000-sf privately owned public space formed by a through-block lot in between West 41st Street and 42nd Street.

As of January 1, 2025, the property is 97.2% leased to 21 unique tenants. The largest tenant, Salesforce, Inc. (Salesforce), representing 242,300 sf of space or 20.6% of the total net rentable area (NRA), has naming rights on the building and has a private entrance on 6th Avenue. Salesforce moved into the building by subleasing its space from MetLife and has invested $73 million ($264 per sf (psf)) for the build-out of its space. The collateral is viewed as a second headquarters, and it recently executed a project to allow all Salesforce employees in the U.S. to have swipe-access to the property. Salesforce is a on a lease that expires in April 2029. The second-largest tenant at the property is Dechert LLP, representing 17.8% of the NRA, on a lease through March 2035, which has invested approximately $45 million or $215 psf of equity into its own space. The largest retail tenant at the property is Whole Foods Market, which has been at the property since January 2017 and has a remaining lease term of 12.1 years. In total, 24 leases, representing 46.5% of the NRA, will roll through 2030, the final year of the fully extended loan maturity with no upfront or ongoing reserves to address this risk.

The sponsor is reserving $54.0 million for planned capex, which is largely going to address concerns raised in the property condition assessment, but still demonstrates its commitment to the property. The renovations include updating the ground floor and creating a sky-lobby amenity. In addition to the capex, the sponsor has $74.6 million reserved for outstanding TI/LC and free/gap rent. The leasing reserves and free/gap rent are committed to recently signed leases but signal to the sponsor's commitment to providing the capital needed for the collateral to succeed.

The sponsor for the transaction is Ivanhoe Cambridge (Ivanhoe. Ivanhoe acquired the property in 2015 when the property was primarily occupied by MetLife. Soon after the acquisition, MetLife put its space up for sublease. Within six months, Salesforce signed a sublease for approximately two thirds of the MetLife space and Apollo and U.S. Bank subleased the remaining square footage within two years. Hines has managed the property since Ivanhoe acquired it. Hines has $92.6 billion in assets under management, totaling more than 236 million sf, 19 million of which is in the tri-state area. Additionally, Hines and Ivanhoe have partnered on real estate projects for nearly 18 years.

Morningstar DBRS' credit ratings on the Certificates address the credit risk associated with the identified financial obligations in accordance with the relevant transaction documents. The associated financial obligations are the related Principal Distribution Amounts and the Interest Distribution Amounts for the related classes.

Morningstar DBRS' credit ratings do not address nonpayment risk associated with contractual payment obligations contemplated in the applicable transaction document(s) that are not financial obligations. For example, the credit ratings do not address Yield Maintenance Premiums.

Morningstar DBRS' long-term credit ratings provide opinions on risk of default. Morningstar DBRS considers risk of default to be the risk that an issuer will fail to satisfy the financial obligations in accordance with the terms under which a long-term obligation has been issued.

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE CONSIDERATIONS
There were no Environmental/Social/Governance factors that had a significant or relevant effect on the credit analysis.

A description of how Morningstar DBRS considers ESG factors within the Morningstar DBRS analytical framework can be found in the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Factors in Credit Ratings (August 13, 2024) https://dbrs.morningstar.com/research/437781.

All credit ratings are subject to surveillance, which could result in credit ratings being upgraded, downgraded, placed under review, confirmed, or discontinued by Morningstar DBRS.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The principal methodology is the North American Single-Asset/Single-Borrower Ratings Methodology (December 13, 2024). https://dbrs.morningstar.com/research/444612.

Other methodologies referenced in this transaction are listed at the end of this press release.

With regard to due diligence services, Morningstar DBRS was provided with the Form ABS Due Diligence-15E (Form-15E), which contains a description of the information that a third party reviewed in conducting the due diligence services and a summary of the findings and conclusions. While due diligence services outlined in Form-15E do not constitute part of Morningstar DBRS' methodology, Morningstar DBRS used the data file outlined in the independent accountant's report in its analysis to determine the credit ratings referenced herein.

The credit rating was initiated at the request of the rated entity.

The rated entity or its related entities did participate in the credit rating process for this credit rating action.

Morningstar DBRS had access to the accounts, management, and other relevant internal documents of the rated entity or its related entities in connection with this credit rating action.

This is a solicited credit rating.

Please see the related appendix for additional information regarding the sensitivity of assumptions used in the credit rating process. Please note a sensitivity analysis is not performed for CMBS bonds rated CCC or lower. The Morningstar DBRS Long-Term Obligation Rating Scale definition indicates that credit ratings of CCC or lower are assigned when the bond is highly likely to default or default is imminent, thereby prevailing over a sensitivity analysis.

DBRS, Inc.
22 West Washington Street
Chicago, IL 60602 USA
Tel. +1 312 332-3429

The credit rating methodologies used in the analysis of this transaction can be found at: https://dbrs.morningstar.com/about/methodologies.

North American Commercial Mortgage Servicer Rankings (August 23, 2024)
https://dbrs.morningstar.com/research/438283

Morningstar DBRS North American Commercial Real Estate Property Analysis Criteria (September 19, 2024)
https://dbrs.morningstar.com/research/439702

Legal Criteria for U.S. Structured Finance (December 3, 2024)
https://dbrs.morningstar.com/research/444064

For more information on this credit or on this industry, visit https://dbrs.morningstar.com or contact us at info-DBRS@morningstar.com.